Malaysian minister calls for making crypto legal tender
In this issue
- Crypto in Malaysia: B-ringgit on
- Otherside: Expanding metaverse
- Chinese blockchain: Admissible in court
From the Editor’s Desk
Dear Reader,
What are cryptocurrencies for?
That’s often the first question that those outside the crypto space ask when they look to acquire some knowledge of it. And it’s a fair question.
Most people assume the answer is that cryptos are a means of making a quick buck, right? After all, everyone’s got a story of a friend or acquaintance who has made a killing on Bitcoin (or has lost their shirt, depending on their luck) somewhere along the line.
Investment and speculation are certainly a big part of the story, but not all of it, as a Malaysian government official reminded us this week.
When Deputy Minister of Communications and Multimedia Zahidi Zainul Abidin said on Monday that he hoped Malaysia would make Bitcoin and other cryptocurrencies legal tender, his sentiments echoed the white paper that launched Bitcoin, which described the world’s first crypto as a peer-to-peer payment system and pointedly did not characterize it as a tool for speculation.
Speaking of speculation, it remains a matter of conjecture as to whether Mr. Zahidi spoke out of turn. Malaysia’s central bank has long disparaged crypto and at one point even raised the possibility of banning it — a stance that hardly bodes well for its adoption as a parallel currency alongside the ringgit.
And developments elsewhere in Asia suggest that pushing for the adoption of crypto as legal tender may be a lonely battle. Neighboring Singapore, for instance — once regarded as a leader in crypto adoption — has seen its central bank pour cold water on crypto use by its own citizens. Hong Kong has also moved to keep its masses out of crypto markets.
Further afield, central banks in India and Russia are among those that have made arguments to ban crypto entirely, and although these efforts have failed, crypto’s adoption as legal tender is nowhere in sight.
So, will Malaysia break ranks and join El Salvador, the only country in the world that has adopted Bitcoin as an official means of exchange? If so, Malaysia would distinguish itself among its Asian neighbors that are cooling on crypto.
Despite skepticism about crypto’s prospects as a means of payment, people in all corners of the globe are using it to make everyday purchases — from cappuccinos in Japan to basketball boots in the U.S. to groceries in Australia — not just to play the market.
Until the next time,
Angie Lau,
Founder and Editor-in-Chief
Forkast
1. A digital currency dalliance
By the numbers: Malaysia Bitcoin — over 5,000% in Google search volume.
Malaysia’s deputy communications minister has suggested that cryptocurrencies be adopted as legal tender in the country, stirring interest among crypto watchers as his comments appeared to position the Southeast Asian nation alongside El Salvador, the only country in the world so far that has given Bitcoin such standing.
- Deputy Minister of Communications and Multimedia Zahidi Zainul Abidin made the remarks in the lower house of parliament in response to a question from legislator Syed Ibrahim Syed Noh, who was seeking clarification of the government’s stance on the trade in non-fungible tokens (NFTs).
- Zahidi said the ministry, which has oversight of digital industries, was trying to see how the country could legalize crypto in order to increase its uptake among young people. He conceded that any final decision on the matter would ultimately be taken by the country’s central bank and its securities regulator.
- Four years ago, Malaysia’s central bank warned the public that cryptocurrencies were not recognized as legal tender in the country.
- The average age of crypto investors in Malaysia is around 35 years old, and investors aged 25-34 make up the largest demographic, comprising 32% of the market, according to April 2021 research by Oppotus Research Group. Investors aged 18-24 make up 20% of the market.
- El Salvador became the only country to adopt Bitcoin as legal tender last September, and unconfirmed reports suggest that Honduras may follow its lead.
- Malaysia’s central bank said earlier this year that it was studying the need for a central bank digital currency (CBDC).
Forkast.Insights | What does it mean?
Bitcoin maximalists may be salivating over the prospect of another country adopting Bitcoin as legal tender, but they might want to take a reality check. The proposal was put forward by the No. 2 official at the communications ministry, yet cryptocurrency regulation falls under the purview of the central bank and securities commission, and the bank has remained silent on this proposal. The deputy minister’s position is also at odds with other government remarks on crypto just weeks ago, when the deputy finance minister categorically ruled out Bitcoin being used as a form of currency in the country.
Malaysia’s history with crypto may provide a clearer guide to the prospects of it joining El Salvador, which six months ago made Bitcoin legal tender.
Like many other countries, Malaysia has a problem with the energy-intensive process of crypto mining. Although proof-of-work mining operations aren’t illegal in Malaysia, authorities are struggling to stop miners from stealing power from the grid. Cases of electricity theft involving illegal Bitcoin mining have surged in the country, with 7,209 reported last year — an almost 12-fold increase from 610 in 2018, according to power supplier Tenaga Nasional, which last summer made a very public display of its determination to literally crush illegal mining.
Malaysia’s government has also taken a dim view of crypto exchanges. It kicked Binance out of the country last summer. The only positive statements it has made regarding crypto have been related to a research project exploring the viability of CBDCs. Sorry, Bitcoin.
2. Yuga’s simian side
By the numbers: Otherside — over 5,000% increase in Google search volume.
Bored Ape Yacht Club creator Yuga Labs has released a trailer for an upcoming metaverse game project named “Otherside,” following last week’s release of ApeCoin, a governance token for the non-fungible token (NFT).
- The trailer suggests that Yuga Labs’ metaverse will feature popular NFT collections such as Bored Ape Yacht Club alongside its CryptoPunks and Meebits collections, rights to which it recently acquired from Larva Labs.
- ApeCoin is an ERC-20 fungible token created by ApeCoin DAO, a decentralized autonomous organization comprising NFT owners from the Ape ecosystem, such as Bored Ape Yacht Club and its spinoff Mutant Ape Yacht Club.
- Although ApeCoin DAO claims that ApeCoin was not developed by Yuga Labs or Bored Ape Yacht Club, a pitch deck from Yuga Labs seen by The Block suggests that Yuga has been involved with the project.
- ApeCoin’s project description says that Yuga Labs will claim 150 million tokens among the billion-token cap — or 15% — and that 80 million tokens will be allocated to Bored Ape Yacht Club’s founders.
- ApeCoin was trading at US$11.87 at press time, up 60.6% since its launch.
Forkast.Insights | What does it mean?
Yuga Labs has wasted no time in corralling high-profile names both within and outside crypto, and this latest venture is perhaps its most audacious yet.
In little more than a week, Bored Ape Yacht Club has gone from being an NFT collection to becoming a multi-faceted media machine. ApeCoin, a token that is not directly tied to the NFTs, has nonetheless been given the blessing of its creators.
Shortly after ApeCoin’s launch, Animoca Brands announced that it would incorporate the coin into a forthcoming project with the Ape community. Although details of the Otherside metaverse are scarce, the video trailer gives some clues that align with Yuga Labs’ strategy of being a conduit between Web 2.0 and Web 3.0.
The video features not only properties that Yuga Labs owns, but others including Cool Cats, CrypToadz, Nouns, and World of Women. This suggests Otherside will be a metaverse not only for its own assets but those in the broader crypto industry, too.
Given Yuga Labs’ ability to attract mainstream brands to existing assets, expect more such brands to be an even bigger part of whatever it rolls out next.
3. Blockchain at the bench
China’s Sichuan Province and Inner Mongolia Autonomous Region have become the country’s latest regional jurisdictions to accept court case evidence and documents submitted and logged on blockchains.
- A district court in Inner Mongolia recently referred to contracts stored on a blockchain in examining a loan contract dispute between a local bank and one of its clients.
- In a free trade zone in Sichuan, evidence in a copyright infringement case that had been stored on a blockchain led a court to rule last year that a piece of music had been plagiarized.
- China has accelerated its use of blockchain technology in legal proceedings, with at least 1.7 billion pieces of evidence stored for trials, according to a 2022 work report by the Supreme People’s Court, China’s highest court, released this month.
- Blockchain has long been championed by its supporters as technology for a digital society, as it is based on the immutable and verifiable recording of information without the need for paper-based records.
- Last August, the Supreme People’s Court deemed that evidence stored on blockchain is valid and will be accepted in courts of law.
Forkast.Insights | What does it mean?
The use of blockchain-based evidence by Chinese courts is well established, with the Supreme People’s Court issuing a regulation as early as 2018 that recognized the technology as a legitimate means by which to collect, fix and tamper-proof data.
Record keeping is an obvious use for blockchain technology in the legal realm, not the least when it comes to matters of legal precedent. Tokenizing government records also means they can be accessed without government intermediaries and verified by members of the public.
Blockchain can also help ensure data integrity and maintain a chain of custody — the paper trail that records the chronological sequence of how evidence has been handled, stored, transferred and transported — ensuring its admissibility in court. Chinese President Xi Jinping declared blockchain a national priority in 2019, and the country’s ambition to develop blockchain applications may lead to more innovative uses of this technology in China’s legal system in the future.
